A Basic Income Grant for All: Time to make it happen in Namibia!

Namibia still faces one of the highest income inequalities in the world. Many inhabitants still live in poverty with a bleak outlook on the future alongside a few who have accumulated extreme wealth. Despite the efforts and achievements after independence, food insecurity, malnutrition, overburdened and sometimes inefficient education and health systems, high unemployment rates and low levels of local economic development are still serious challenges. In the absence of economic security for the majority, precarious living conditions and poverty are still widespread.

The Namibian Government’s NAMTAX commission of 2002[0] regarded the reduction of Namibia’s income inequality not only as a justice issue, but as a prerequisite for economic growth. Therefore, the introduction of a Basic Income Grant freeing people from a survival economy was proposed as a matter of urgency. The BIG pilot project in Otjivero documented the positive social as well economic impact of the grant on food security, education, health, crime and local economic activities. During the 2013/14 drought, another 6,000 people in Omusati, Kunene, Kavango West and Hardap experienced the developmental impact of a cash grant. This emergency cash grant of the Lutheran Churches was modelled on the Namibian BIG proposal.

The evidence of the pilot project and the drought relief showed that first and foremost, the current high levels of malnutrition amongst children under the age of five are effectively tackled through the payment of the grant. It has been further shown that economic security for people with low income greatly enhances the efforts in the health and education sector, supporting government’s interventions in these areas. Since Dr Hage Geingob took over as President in 2015 and appointed the head of Namibia’s BIG Coalition, Dr Zephania Kameeta, as Minster of Poverty Eradication and Social Welfare, there was widespread hope that a BIG will finally be introduced at national level. In September 2015, government held a national dialogue on poverty eradication and wealth redistribution across the country during which people repeatedly raised their voices in support of the BIG in order to make it happen.

For more than a decade, Namibia’s BIG Coalition of churches, NGOs, youth organisations and trade unions has been actively calling for the introduction of a BIG as the leading method to eradicate poverty in Namibia. It argued that a monthly cash grant should be paid by the state to every Namibian citizen. The main benefit of the grant is its ability to improve everyone’s life by eradicating destitution and reducing poverty and inequality. The BIG allows the recipients to choose how to spend the money and thus gives them enhanced freedom and personal responsibility. It is not an act of charity but it provides people with a right to a decent life.

The BIG Coalition has pointed out that since independence, the Namibian government has introduced various social grants. The universal pension achieves an almost universal coverage of people above the age of 60 and the beneficiaries of the grants for children increased manifold in the last years. In combination with the disability grants and the war veterans’ grants, Namibia already provides a safety net for some vulnerable groups. However, there are still far too many people affected by poverty and in 2015, the United Nation’s Good and Agriculture Organisation (FAO) reported that 42% of Namibians were under-nourished. Thus the Coalition argued that there was an urgent need to expand the social protection system and that the BIG was the only programme that will reach everybody. As a rights-based approach it ensures that nobody lives below a certain minimum.

The pilot project in Otjivero

The effectiveness of a BIG was demonstrated clearly when the grant was implemented in the settlement of Otjivero in 2008-09. A research report outlined the key changes that occurred within 12 months of the introduction of the BIG:

‘Before the introduction of the BIG, Otjivero was characterised by unemployment, hunger and poverty. Most residents had settled there because they had nowhere else to go, their lives were shaped by deprivation and they had little hope for the future.

The introduction of the BIG ignited hope and the community responded by establishing its own 18-member committee to mobilise the community and to advise residents on how to spend the BIG money wisely. This suggests that the introduction of a BIG can effectively assist with community mobilisation.

As the BIG was only introduced in one particular location, there was a significant migration towards Otjivero. Impoverished family members moved into Otjivero, attracted by the BIG. Even if migrants themselves did not receive the grant, this points to the need to introduce the BIG as a universal national grant in order to avoid migration to particular regions, towns or households.

Since the introduction of the BIG, household poverty has dropped significantly. Using the food poverty line, 76% of residents fell below this line in November 2007. This was reduced to 37% within one year of the BIG. Amongst households that were not affected by in-migration, the rate dropped to 16%. This shows that a national BIG would have a dramatic impact on poverty levels in Namibia.

The introduction of the BIG has led to an increase in economic activity. The rate of those engaged in income-generating activities (above the age of 15) increased from 44% to 55%. Thus the BIG enabled recipients to increase their work both for pay, profit or family gain as well as self-employment. The grant enabled recipients to increase their productive income earned, particularly through starting their own small business, including brick-making, baking of bread and dress-making. The BIG contributed to the creation of a local market by increasing households’ buying power. This finding contradicts critics’ claims that the BIG would lead to laziness and dependency.

The BIG resulted in a huge reduction of child malnutrition. Using a WHO measurement technique, the data shows that children’s weight-for-age has improved significantly in just six months from 42% of underweight children in November 2007 to 17% in June 2008 and 10% in November 2008.

HIV positive residents’ access to ARVs was hampered by poverty and a lack of transport before the BIG was introduced. The BIG enabled them to afford nutritious food and gain access to the medication. This was further enhanced by government’s decision to make ARVs available in Otjivero, freeing residents from the need to travel to Gobabis, a town situated over 100 km away.

Before the introduction of the BIG, almost half of the school-going children did not attend school regularly. Pass rates stood at about 40% and drop-out rates were high. Many parents were unable to pay the school fee. After the introduction of the BIG, more than double the number of parents paid school fees (90%) and most of the children now have school uniforms. Non-attendance due to financial reasons dropped by 42% and this rate would have been even higher without the effects of migration towards Otjivero. Drop-out rates at the school fell from almost 40% in November 2007 to 5% in June 2008 and further to almost 0% in November 2008.

The residents have been using the settlement’s health clinic much more regularly since the introduction of the BIG. The clinic’s income from user fees increased fivefold after the introduction of the grant.

The BIG has contributed to a significant reduction of crime. Overall crime rates – as reported to the local police station – fell by 42% while stock theft fell by 43% and other theft by nearly 20%.

The introduction of the Basic Income Grant has reduced the dependency of women on men for their survival. The BIG has given women a measure of control over their own sexuality, freeing them to some extent from the pressure to engage in transactional sex.

Based on these results, the BIG coalition argues that a national BIG will break the debilitating shackles of poverty and to free people from precarious survival choices. Economically, the Basic Income Grant will kick-start local economic development based on local production and consumption of basic consumer goods. The Namibian pilot project in Otjivero as well as relevant international experiences demonstrate that such grants circulate within the local economy and thereby shifting buying power and investment capital into the rural areas.

Furthermore, the Basic Income Grant will also mitigate the negative effects of erratic weather patterns in Namibia. The recurring droughts and floods during the last years bear witness to the proneness of Namibia to such natural disasters and climate change. The livelihoods of rural communities depending on subsistence farming or pastoral economy are threatened by such disaster. The BIG provides an important safety net in this regard.

Why should everybody get the BIG and not just the poor?

Classic welfare programmes using a means-test to target beneficiaries have been proven to be more expensive, wasteful and also ineffective to target people and to limit social assistances to specific groups and people. If targeting is applied by means of added administrative requirements it will mean that the poorest are actually those who are least likely to get a benefit from the programmes, as they by nature are the most disadvantaged in terms of access to information, infrastructure, and administrative services provided. Instead, by giving a grant to everyone it will be guaranteed that virtually all people in need receive support. The BIG is therefore cheaper to administer, it is free from corruption and it will not exclude anybody in need.

Those who are well off will also receive the grant but they have to pay it back to government through adjustments in the income tax systems. The rich should pay back more than the grant they receive and thus the BIG will be a form of redistribution in favour of the poor.

Based on the success of the universal old age pensions which are paid out to every Namibian who reaches the age of 60 (no matter what their income is), it has become clear that universal grants are far easier and cheaper to administer than targeted and means-tested grants which carry huge administrative costs and they often reach only some of the intended beneficiaries.

Recent development

The Namibian government still seems reluctant to implement a national BIG and instead announced the introduction of food banks. Despite the empirical evidence and the calls for the BIG during the national dialogue of 2015, government officials seem to regard the BIG as an unaffordable welfare measure while international agencies like the International Monetary Fund (IMF) are opposed to universal cash grants and thus cautioned Namibia’s policy makers against the implementation.

The original proposal for a BIG in 2005 was N$ 100 per person per month. Taking account of inflation the BIG today would have to be set at not less than N$ 200 per person per month. This will have to be adjusted annually in line with inflation and GDP growth. A national BIG could be paid through the national post office’s savings account system to include the recipients into the public savings system. The pay-outs of the pilot project and the drought relief have shown that the national post office (NamPost) is as a cost-effective, administrative efficient and client-friendly service provider. Compared with the purely profit-driven private banking institutions, NamPost provides an alternative which would help to limit the administrative costs to below 10% of the BIG payments.

At a rate of N$ 200, the costs for a national BIG will be about N$ 2.8 – 3.5 billion which is 2-3% of Namibia’s GDP and 5-6% of the national budget[1]. This is far less than what Namibia currently spends on defence and the BIG is certainly affordable. It can be financed through the national budget based on a variety of sources such as income tax, corporate tax and a natural resource tax. The BIG is not just an expense but it is a social investment in the wellbeing of the majority as envisaged by Article 95 [2] of the Namibian constitution.

The BIG will certainly lead to an immediate improvement in the living conditions of the majority of our population. It is a contribution to redressing some of the structural economic injustices towards economic inclusion. The Basic Income Grant contributes towards the realisation of socio-economic rights and human dignity as well as improved standards of living. It signals a commitment towards building a more inclusive society and what is required now is the political will by the Namibian government to roll-out the grant.

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